In the Meiji period, as a Latecomer in industialization, Japan had to develop her industry rapidly under the pressure of competition with the industrialized nations of the West. However, the accumulation of capital in the private sector was relatively small, and the capital market was not much developed. Under these conditions, the Bank of Japan played an important role in providing funds to the silk industry, the cotton mill industry the foreign trade, etc. and helped the growth of these important industries. The primary function of the Bank of Japan as the central bank was to control the monetary value, interest rates, and business flucations; but it also had to follow a policy to promote industries, at least for a certain period of time, in the backward nations. The note of the Bank of Japan were issued-from 50 percent to 70 percent-on the fiduciary reserve, most of which were Government bonds and private bills. Private bills were mostly IOU's, not commercical notes. To put it differently, the Bank of Japan promoted the growth of industries through the issues of notes based on public and private debts. These are the characteristics of the role of the Bank of Japan in the Japanese industrialization. It is the intention of the writer to compare the above situation with those of other countries, and reexamine the role of the central bank in industrialization.

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The note issue in Japan begin in 1869 by the Exchange Company, followed by that of the National Bank. However, these early banks could not provide enough capital for rapid economic growth because of the limitation on their power of credit creation. As their note issues were limited to the amount of their capital, they could not cope with the growing demand for money. At the same time, the high rate of legal requirement severely restricted their ability to create money. The decentralized system of note issues was quite inffective, and made a centralized monetary policy impracticable. The Bank of Japan removed these weaknesses, and the Bank's issue furnished an elestic currency. The Convertible Banknote Act of 1888 introduced the elastic limit method, under which the Bank of Japan could issue notes to the amount of its specie reserve plus a certain amount specified by the law (fiduciary issue). The Bank was also allowed the power of excess issue. Such an elastic system of note issue made possible the rediscount policy taken at the Time of the Panic of 1890, and the finance of the Sino-Japanese war and the war with Russia. In this sense, the system of the Bank's note issues was "revolution-ary". However, the amount of specie reserve fluctuated greatly because of business cycle and war finance, and the accumulation of specie depended upon the government aid, an indemnity from China, foreign investment, etc. This was a characteristic of the underdeveloped economy. The role of the Bank of Japan in industrialization is shown in its capacity to provide necessary capital, and its note issues formed the basis of such an ability.

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During the period of the Japanese industrialization,1887-1907, the Bank of Japan provided capital not only to burgeoning industries through commercial banks but to the Yokohama Species Bank which had been set up to serve the foreign trade sector. (1) the Zaibatsu banks such as the Mitsui, Mitsubishi, Sumitomo, and Yasuda obtained the greatest portion of loans from the Bank of Japan, and provided capital to the mining and railroad companies. (2) The commercial banks in Osaka area discounted commercial notes of cotton textile companies, and the Bank of Japan stood ready to rediscount all such advances. (3) The banks in Yokohama and rural area obtained loans from the Banks of Japan in order to provide capital to the silk industry. Thus, the Bank of Japan contributed to the development of these industries, and accelerated the growth of monopoly in the above fields.

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The highly developed financial system, as is described Bagehot's classic Lombard Street, was gradually moulded during the Industrial Revolution. Peel's Bank Charter Act 1844 marked the completion of the frama-work of that financial structure. In the process towards the formation of this classical money market, the Bank of England has come to play an important role as a central bank, both in banking (discounting and re-discounting bills) and monetary (suppling of money) sides of financialfunctions. The present author examines the evolution of the behaviour of the English central banking against the background of the economic development. Central banking is here investigated as a growth-inducing as well as a growth-induced, and as a pattern-of-growth-deciding as well as a pattern-of-growth-decided factor. One of the essential features which characterized the monetary system after the Industrial Revolution was the centralization of the note-issue to a single institution, i. e. The Bank of England. This system of single-issue was accompanied with the strict control of the supply of money, the sum of Bank-note issue being rigidly relation to the amount of the gold-reserve, or in terms of the cash-ratio. In contrast with this, the Bank of England in the 18th and early 19th centuries had behaved itself as an active contriver of the <<Paper Money Mercantilism>>. Supplying money by a positive credit-creation without much adherence to the cash-ratio, the Bank had then contributed to prepare one of the pre-conditions for the Industrial Revolution (or "take-off"). With this in view, an emphasis is laid in this paper to follow the trial-and-error process of the change in Bank's issuinga-ttitudes-a change from the policy for development (or "internal equilibrium") to that for monetary stability (or "international equilibrium"). This alteration in the direction of monetary policy means a decided step towards the establishment of international gold-standard system. In the letter part of this article, it is analysed that there was a specially adequate relationship between this system and the economic interests of the Lancashire cotton industry, in rivarly with the other economic sectors or with the then developing backward countries. The commercial banks in Japan could not serve the foreign trade sector at that time because of the high interest rate compared with that of foreign countries. The Bank of Japan made loans to the Yokohama Species Bank at a low rate, and enabled the back to service the needs of this sector.

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During the first part of the nineteenth century, the Privatbankier was the center of the financial activities in Prussia. They financed the export of agricultural products by the Junkers, speculated in foreign bonds, and dominated small manufacturers and merchants. The royal bank of Prussia, die Kgl. Giro-und Lehn-Banco zu Berlin, helped private bankers and merchants engaging in foreign trade. the activity of the bank centered in the eastern part (Berlin), and it oppressed the more modern from of commercial credit growing in the western part of the country. In the 1840's, the railroad construction and introduction of the factory system produced a tight credit situation, and various plans for the creation of banking institutions came to the fore. These plans can be classified into (1) a decentralized plan by Hansemann and Mevissen to create note issuing banks in every Land, and (2)plans for the central bank, either as a national bank (Rother) or a private corporation (Bullow-Cummerow). In 1846, as a realization of the Rother Plan, the royal bank was changed to the Prussian Bank with capital from the public. At the time of the revolution (1848), Hansemann, the president of the Prussian Bank, tried to modernize its policy by changing the traditional line favoring private bankers. However, the success of the counter-revolution defeated his plan, and von der Heydt who supported the traditional policy took over. In the 1850's, the Prussian Bank continued its support for private bankers who began to enter into the field of mining and railroad industries with the Junkers. The Bank obtained the power to issue notes without Limit in 1856, and emerged as the central bank of Germany overwhelming other banks of issue.

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